If you've been thinking about your own mortality, you aren't alone, and such thinking isn't without merit. The US Surgeon General recently said, “This is going to be our Pearl Harbor moment, our 9/11 moment, only it's not going to be localized. It's going to be happening all over the country.” (Source: SacBee Article April 5, 2020)
This is why many people are blowing up the internet looking for ways to handle their final affairs. With all that is going on with the pandemic, thoughts of how our estate will pass is definitely something you should think about considering this virus isn't going to discriminate. In fact, the White House on Wednesday estimated that 100,000 to 240,000 Americans may be killed by covid-19. (Source: Washington Post Article April 5, 2020)
There are many options for drafting your estate plan, and each of them falls in to the “good, fast, or cheap” categories that I spoke of in my previous article on March 1st. (Link: Do I need an attorney to draft my estate plan?) As I said in that article, you will have to make the decision on what is right for you and your family. However, if choosing the fast and cheap option appears wise considering the circumstances with Covid-19, you should consider what that could look like for you.
A perfect example of the fast and cheap option in drafting a will is one that can be done online, usually for the same cost of lunch for you and your family. Seems like a great deal, until it isn't. I sometimes say having something in place is better than nothing. While that may be true in most situations, when it comes to estate planning, that “something” could create more questions than answers. When it comes to probating your estate, those questions often turn into litigation. And you don't have to be a lawyer to know that litigation turns into a huge expense, not to mention the hard feelings between your loved ones.
There is a saying that is passed around in the mortgage industry in regard to the automated underwriting systems used to pre-approve potential homeowners. The saying goes, “Garbage In – Garbage Out”. While at first glance that sounds insulting, but it has little to do with the applicant, and more to do with the quality of work entered into the computer by the loan officer. If the loan officer miscalculated income for the applicant, the automated approval will be based on the miscalculation, and well, you guessed it, garbage out. That garbage often ends up being what causes a lot of those horror stories we have heard about buying a home.
The same holds true for those online services that promise to draft your last will and testament for under $40. If you don't know how to phrase the gifts you're giving in your will, it may result in no gift at all. For example, let's say that you wrote, “I wish to give my 100 shares of ABC Corp stock to my kids, Jimmy, Sally, and Tommy.”
There are three major issues with that one sentence, 1) precatory words, 2) specific versus general gifts, and 3) pretermitted children. All of these alone are enough to tie up your estate in probate court for an extended and costly period of time.
The first, “precatory words”, are those words which identify a wish or desire, but not a command or requirement. If you say, “you wish” something was to happen, it is just that, a wish, one that your personal representative (the modern-day term for executor) isn't required to follow. However, if you phrased that sentence with “shall” or “must”, these are terms showing a requirement which must be followed.
Second, the issue between specific and general gifts is one that is ripe with many different issues. For instance, if a specific gift is no longer in your estate, say you were to sell the item before death, the gift of that item is no longer valid since you were specifically giving that item to someone and it is no longer part of your estate.
This can happen without you recognizing it. For example, let's say you trade one stock for another stock, intending for the new stock to still be gifted in the same manner as the original stock. Unfortunately, the original stock specifically identified in the will is no longer in your estate, and yes, you guessed it again, that stock likely won't go to the heir you intended.
Another issue with specific versus general gifts is the payment of taxes and costs of administration. Many wills are written in such a way that taxes and costs are paid from certain portions of the estate, and most of the time excluding the specific gifts from bearing such expense. If a specific gift fails, like in the previous example, it falls into the residue of your estate and is now possibly subject to paying those taxes and costs.
Third, the issue with children is something that may seem fairly easy if you have your family pretty well established. But we often don't find our lives following the plan we have previously established. Yes, Jimmy, Sally and Tommy may be your kids right now, but there is no way of saying if they will be alive at the time of your death, or that you won't have any more children come into your life after the execution of your will. If you have made it so you can no longer have natural born children, life may still find a way for you to welcome a fostered or adopted child into your family. Thus, making the specific definition of children established in our example inadequate.
While there are several other issues with our example, I will restrain myself from turning this into a legal dissertation. I will leave it at this; writing in your will “I wish to give my 100 shares of ABC Corp stock to my kids, Jimmy, Sally, and Tommy” is flawed even though it may sound proper to the average non-lawyer.
A lawyer is trained to hear what you want to do with your estate and write it in a way that has the most chance to dispose of the estate in the way you intend, and with the least chance of turning it into a litigation nightmare. This is just a small reason why the “fast and cheap” option in using those online services are not your best option.
The internet can't replace the ability of a lawyer to build the rapport with you that is needed to properly draft your estate plan, nor the skills needed to write it in such a way that will keep your family friendly with each other, rather than enemies.
If you're thinking of creating your estate plan, we have always offered virtual consultations through Zoom meetings, even before the virus pandemic. We can use this valuable tool to ensure your family is taken care of if tragedy strikes.
Reach out to us today to schedule your consultation!